Miriam J. Baer, Executive Director January 28, 2013 North Carolina - - PowerPoint PPT Presentation

Miriam J. Baer, Executive Director

January 28, 2013

North Carolina Real Estate Commission ¡

n State government agency n Dedicated to licensing and regulation of

real estate brokers

n Your source for real estate information

What does the Commission do?

The Commission is responsible for:

n Licensing and Education

¨ Pre-licensing, post-licensing & continuing

education

¨ License examination & character assessment

n Regulatory matters

What we can do for you:

n answer your questions by phone

¨ 919-875-3700

n provide you with information on our Web

site

¨ NCREC.gov

n come to your Board or Association to

speak and answer questions.

Upcoming Commission Meetings

Come watch the Commission work:

n February 6 n March 6 n April 3

at the Commission’s office 1313 Navaho Drive, Raleigh

RECENT LAW AND RULE CHANGES

Real Estate License Law

n Provisional brokers:

¨ If you don’t take post-licensing courses on

time, your license will be placed on inactive status - your license will NOT be cancelled.

¨ While inactive, you cannot engage in

brokerage, but you can activate by taking courses and you won’t have to retake the licensing exam.

Real Estate License Law

Brokerage Contracts:

n As always, they must be in writing.

n New law clarifies that without a written

agreement, you cannot sue for a commission.

n Protect yourself and your company with written

brokerage agreements.

Reciprocity Legislation

n Reciprocity is out n State-specific licensing exam is in n Already have a current reciprocal

license? You can keep the license indefinitely if you:

¨ Renew each year ¨ Take necessary CE

Mineral, gas and oil rights

n Minerals, oils and gases underground can

be owned separately from the land above

n Some developers “reserve” mineral rights

• r the like to themselves, when conveying

the property

n Some oil & gas companies lease oil, gas

rights directly from property owners for money (“bonus” payments, royalties, rents)

Separating oil & gas from land - hyrdraulic fracturing, or fracking

n New law allows “fracking” n Well is drilled down vertically, perhaps a

mile or more below the surface of land

n Well is then drilled across horizontally,

again sometimes more than a mile

n Water and chemicals are pumped into the

well at high pressure to force the release

• f natural gas from the shale rock by

fracturing it

Oil and Gas Disclosure

n With the legalization of fracking came a

requirement that virtually all residential sales contracts include a disclosure

¨ Disclosure cannot be waived

n Seller can make “no representations” as to

whether oil and gas rights were severed from the property by a prior owner

n Seller must disclose if s/he has severed

the rights or intends to do so pre-closing

Oil & Gas Disclosure Exceptions

n Court order n Administration of an estate n Sales between co-owners n Lease with option where tenant occupies

the dwelling

n Vacant/unimproved land

¨ Buyers and buyer agents should

inquire as part of due diligence

Offer to Purchase – oil & gas disclosure as mandated by law:

• 1. Oil & gas rights were severed by a previous
• wner. __Yes; __No; __No Rep
• 2. Seller has severed the oil and gas rights

from the property. __Yes; __No

• 3. Seller intends to sever the oil and gas rights

from the property prior to transfer of title to

• Buyer. __Yes; __No

*In transactions where the buyer is getting the

• il & gas rights, answer “No” to #2, 3

Making an offer with the new oil and gas disclosure language

Buyer agent can…

n fill in the answers as buyer wants them to be

¨ Listing agent and seller must correct/counteroffer

n contact listing agent for information and fill in

the offer accordingly (assuming buyer still wants to make an offer)

n leave the answers blank and let the seller/

listing agent fill them in (counteroffer)

More Info: Fracking/Oil and Gas

n Commission’s Web site - ncrec.gov n Dept of Justice – ncdoj.gov

¨ Oil and Gas Leases in NC-Summary of

Landowner and Public Protections in the Law

¨ Oil and Gas Leases in NC: Landowners’

Rights

n CNN videos on fracking – youtube.com

New Residential Property Disclosure Statement in Effect

n After the legislature mandated disclosure of

information about owners’ associations, the Commission decided it was time for a complete overhaul of the form to make it more user-friendly.

¨ Each question now stands alone ¨ HOAs addressed in the separate section on the

form

New RPDS

n You should be using the new form now

¨ Listings carried over from 2012 - old form ok

unless property condition has changed

n The instructions have been clarified to say

that the owner is responsible only for the things within his or her “actual knowledge”

n Checking “No Rep—” is permitted, even if

the seller has actual knowledge

¨ Broker has a legal duty to disclose material facts

the broker knows or should know.

New RPDS

n Some questions are about only the “dwelling”

while others relate to the whole “property” (including land, other structures)

n Q1 - Seller can explain “year…constructed” n Q10-12 – more info about HVAC n Q13 – “shared well” added for water source n Q17 – “…do you know how many bedrooms

are allowed by the septic… permit?”

New RPDS

n Q19 – specifically lists a variety of systems

and fixtures rather than asking the parties to know what a system or fixture is

n Q20 – broadened to include any

appliances included in the conveyance, not just built-ins

n Q23 – clarified to get at whether there

have been room additions or structural changes

n Q33 – new – HOA transfer fees

Broker Price Opinions (BPOs)

n New law addresses BPOs /CMAs n BPO/CMA both defined as “an estimate…

by a…broker [of] the probable selling price

• r leasing price of a particular…property…”

¨ Allows comps, but not automated valuation

model (mathematical modeling combined with a database)

n Brokers cannot estimate value/worth, just

probable selling price; otherwise it’s an appraisal, requiring an appraisal license.

BPO’s by “Full” Brokers

n You are no longer limited to situations

where you can reasonably expect to get the listing or buyer agency agreement;

n Effective October 1, 2012, “full” brokers

(not provisional brokers) may perform BPOs for a fee.

n BPOs cannot be used for a mortgage loan

• rigination, including a first or second

mortgage, refinance, or equity line of credit.

BPOs by Provisional Brokers

n May not charge a separate fee n May perform a BPO/CMA as a service to a

buyer or seller and receive a sales commission as part of the transaction

Required Contents of a BPO

n BPO must be in writing and must include:

Ø Statement of its intended purpose Ø Brief description of the property to be priced Ø Basis of reasoning Ø Any assumptions or limiting conditions Ø Any interest of the broker in the transaction Ø Effective date, broker’s name, license #,

signature, date of signature, brokerage firm

Ø Specified disclaimer to the effect that it’s not

an appraisal of market value…

Ø A copy of the assignment request

Commission’s new BPO Rules

21 NCAC 58A. 2201, 2202

¨ Broker must have knowledge of the market, direct

access to market data, brokerage or appraisal experience in the geographic area

¨ Broker must be objective, free of influence by an

interested party

¨ Broker must personally inspect exterior and interior

unless inspection is waived in writing

¨ Broker must use appropriate methodology

n Analysis of sales or income

¨ Specific standards are set out for analyzing comps

& communicating comps/adjustments to client

Pending Rule Changes

n Simplify trust account rule n Increase the renewal fee $5 n Allow activation and supervision forms to

be submitted online

n Require BIC whose BIC status is

terminated to take the 12-hour BIC Course prior to re-designation as a BIC

Rules Under Consideration

n Want to weigh in on proposed rules?

¨ Check the Commission’s home page and click

• n the “rules” link.

Rules Under Consideration

n You can track the process from start to

finish on the Commission’s Web site;

n You can submit written comments; and n You can come to the public hearing and

speak (or watch) [already passed for current rulemaking]

n Your Association representatives have

participated in the process on behalf of members.

Possible legislation

n The Commission is considering asking the

General Assembly to make certain law changes relating to:

¨ Expunction of criminal records ¨ License application fees ¨ Trust money ¨ Public records

n This is subject to change – no bill has

been introduced at this time

Legislation – Expunction of Criminal Records

n A new law requires agencies to “reverse”

administrative actions taken against the person whose criminal record is expunged

n The Commission would like the law to be

clarified to require that person to retake the pre-licensing education and examination, if it has been a long time, before the Commission issues them a license.

Legislation – License Application Fee

n The Commission would like to increase

the license application fee to $100 to better reflect the actual cost to the Commission

n Would apply to applicants – not licensees n This cost is currently subsidized by

existing licensees through renewal fees

Legislation – Defining Trust Money

n The Commission is seeking to better

define “trust money” and to clarify when it must be deposited in a trust account

¨ This would allow deposit of money in very

limited commercial lease transactions directly into the owner’s account

Legislation – Public Records

n The Commission is considering asking

that certain records it maintains about licensees not be considered a public record

¨ Primarily for licensee safety ¨ Especially concerned about home addresses

and home emails

COMPLAINTS

n Process n Typical complaints

Complaint Process

n Complaints must be in writing n May be made by consumers, brokers, etc. n Handled by the Commissions’ new Division

• f Regulatory Affairs

¨ Merger of former “Audits & Investigations” and

“Legal” Divisions, effective January 1, 2013

n When received, complaints are assigned a

file number and a case processor

¨ Processor can be a Commission investigator or

consumer protection officer

Complaint Process

n When you are contacted by the

Commission, you are entitled to see a copy of the complaint filed against you, including any documents included in the complaint

n You have a duty to provide a full and fair

response

¨ You can ask an attorney to assist you

Complaint Process

n Some complaints are handled by letter of

inquiry

¨ If you receive one, it should include a

complete copy of the complaint

¨ You have 14 days to file a full and fair written

response

¨ Keep good records and enclose copies to

expedite the process

Audits and Investigations

n Some complaints are handled by an

auditor/investigator who may come to see you in person

n You are required to provide your books

and records to the auditor/investigator

n Having well-maintained, complete books

and records will go a long way toward expediting the process

Completion of Investigation

n Case is evaluated for probable cause

¨ If no probable cause to believe a violation

• ccurred the case is closed

¨ Cases where it appears a violation has

• ccurred go to the Commission members for

a determination of whether to order a hearing

n No discipline is ever imposed without first

giving the broker the opportunity to come to a hearing before the Commission

n Many cases settled by consent agreement

Backlog Substantially Eliminated

n Most cases are investigated right away n The turnaround time for the majority of

cases (80-90%) is less than 90 days

n The average turnaround time for cases

where the Commission calls a hearing upon finding probable cause to believe there has been a violation of the law or rules is 18 months, including investigation, hearing, and settlement or Commission decision.

Typical Complaints

n Misrepresentation

¨ Facts or features of property offered for sale

n School districts n Zoning n Nearby uses n Etc.

¨ Intentional vs. negligent ¨ Direct vs. by omission

Complaints – Subdivision Street Disclosure Statement

n Developer must give the first purchaser of

each property a Subdivision Street Disclosure Requirement [GS 136-102.6(f)]

¨ Discloses who owns the road & who is

responsible for its upkeep

n Until control of the road maintenance is

transferred to the municipality or State, developer or owners are responsible

Complaints – Offer, Acceptance

n Oral agreements are not enforceable n Ideally, buyer will make a written offer

¨ Brokers may then communicate counteroffers

back and forth orally

¨ No contract until the contract is fully executed

n Be careful about leading your client to

believe “we have a deal” – not set until the contract is signed and acceptance communicated

Working with out-of-state brokers

n You may cooperate with, and compensate,

brokers located outside of NC

¨ They must be licensed in their home

jurisdiction

¨ They must NOT physically enter the State of

NC in connection with the transaction unless they are licensed here

¨ Be aware of the limited nonresident

commercial broker license

Payment of commissions

n Brokerage commissions can be paid only

to licensees or to the parties to the transaction

¨ Parties to a transaction are not entitled to be

paid, but the broker may agree to pay the party

¨ Since the party is acting for himself or herself,

and is not acting as a broker, no broker license is required

Useful Resources

n ncrec.gov – NC Real Estate Commission n ncleg.net – NC General Assembly n ncdoj.com – NC Dept of Justice (Office of

the Attorney General)

NCREC.gov – Did you know…

n …you can do a Google search inside the

Commission’s Web site using the “Search” feature

Law and Rules

Law and Rules

n Link on the left, above Publications n Searchable Adobe files

¨ “right click” – “Find” – type the word or phrase

you want to find.

n The word(s) you type must exactly match

n Remember that you can use the “Search”

function inside the Web site instead, which will yield broader results.

Videos on the Commission Site

n Small library now n More to come

www.NCREC.gov

Goals:

n Finding what you need more easily n Fillable forms n Expanded video library n Updating n More information for licensees and consumers

Do you have Web ideas for us?

n Email me: exec@ncrec.gov n Tag line: “Web site” n We will review all suggestions

Visit Us! Call Us! Follow Us!

Visit our site, call us with questions, and follow us on Facebook for

• License status
• BIC issues
• Your education status
• License Law and rules
• Other real estate topics

Remember, we’re your source for real estate information and we’re just a mouse-click or a phone call away.

Miriam J. Baer, Executive Director

www.ncrec.gov 919-875-3700

January 28, 2013